Property buyers in the City and Borough of Juneau could soon face a fine of $50 a day for not disclosing what they paid for a property in the borough.
In late 2020, CBJ Assembly members passed an ordinance compelling property buyers to report transaction amounts to the city within 90 days of the purchase. The rule replaced a voluntary disclosure process and added a confidentiality clause that meant the assessor could not share the purchase price with other parties.
A year after passing, the new rule has not increased disclosures. But, city officials say it has led to frustration as the confidentiality rules make tax appeals more difficult.
Assembly members are now poised to consider a $50 a day fine for property owners that fail to disclose the purchase price within 90 days and to remove the confidentiality clause.
Rogers told the Finance Committee that people view the rule as “toothless” and that it requires “a compliance mechanism” if assembly members want to collect the information.
Since the law was passed, the assessor has mailed disclosure letters to the buyers involved in 977 real estate transactions. So far, 447 have responded.
In addition, property owners appealing tax assessments have expressed frustration that the assessor can’t share information about other properties.
According to Jeff Rogers, CBJ finance director, the confidentiality clause has created a “black box feeling” among tax appellants.
“Prior to this confidentiality provision, the assessor was able to fully and transparently disclose the sale prices that comprised a ratio study. Now, however, the assessor is often forced to say ‘I’m sorry, the underlying sales prices in the ratio study are confidential.’ This has indeed created an air of mistrust, and it perpetuates a feeling that the assessor’s process is opaque,” Rogers wrote in a memo to the committee.
Among questions from assembly members, CBJ municipal attorney Robert Palmer said that the city is the only party prevented from seeing price information.
“That information is not confidential. It’s posted on trade practice databases, and any other property owner that uses an appraiser can get that information. But, when we have an appeal, the information is locked in a box, and we can’t get it,” Palmer said.
Assembly member Christine Woll asked Rogers and Palmer if these changes would mean that anyone could call the assessor and ask about the purchase price of a house down the street.
Rogers said yes.
“It would be a public record kept in the assessor’s office. I expect appellants will ask for all sales prices from the assessor. Or, people can call the assessor’s office and ask for it,” Rogers said.
Palmer explained that in most states, property sales prices are disclosed as part of the sales transaction when the deed transfer is recorded. In some states, transaction information is published in newspapers and in public-facing databases.
Assembly member Wade Bryson suggested that the city allow buyers to submit appraisals in lieu of purchase price information.
Bryson said he prefers appraisals because it represents the opinion of a professional and is not a reflection on the negotiation skills of the buyer.
Rogers said the CBJ Finance Department is open to the idea.
During the meeting, assembly members acknowledged that any change could lead to consternation — especially if they decided to make the fine retroactive.
“This is going to cause a bit of a firestorm,” Assembly member Michelle Bonnet Hale said.
Mayor Beth Weldon moved the changes to the full CBJ Assembly for additional consideration but said she was never in favor of the disclosure rules.
“We created a wrinkle when we added the confidentiality clause so we should get it out there to discuss it,” Weldon said.
Creating a process
Wednesday night, members of the Finance Committee also voted to codify procedural rules for the Board of Equalization once all the 2021 appeals are complete.
Commercial property owners filed a torrent of appeals last year after the city increased the base land value by 50% throughout the borough, triggering property tax increases for local business owners.
In December, Rogers told the city’s Finance Committee that 130 of 210 commercial property appeals had been closed and 80 appeals remain open and were proceeding along at a rate of about 10 a month.
Rogers said the Board of Equalization had not yet found in favor of an appellant and that four appellants are proceeding to the superior court to attempt to overturn their 2021 tax assessment.
In prior meetings and interviews with the Empire, Rogers said the city used a mass appraisal model to determine the right assessment level. He said the model looked at available selling prices and compared them to assessed value. He said the assessor works with minimal data because buyers and sellers are not required to disclose sales data to the city.
Opponents contend that each section of town should be evaluated independently.
Why disclosures matter
Currently, Alaska is one of only a handful of states that do not require sales price disclosures. The city says requiring sales price disclosures gives the assessor’s office more information with which to conduct its annual assessment.
The assessor’s office uses multiple factors to determine a property’s values, but the city doesn’t have access to sales prices unless it’s disclosed by the buyer. City officials have said more accurate property assessments will result in more equitable taxation.
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